© Reuters. FILE PHOTO: A sign marks a meeting point for Lyft and Uber users at San Diego State University in San Diego
By Tina Bellon and Norma Geleana
LOS ANGELES / NEW YORK (Reuters) – A California Court of Appeal ruling on Thursday prevented the hailship services Uber and from being suspended Lyft in the state to effectively pass a decision on gig worker benefits and pay it to voters in a November election.
The last-minute ruling on a case with potential impact on the global gig economy means drivers can continue to work as independent contractors while the appeals court examines driver status.
The companies had already threatened to close at midnight in California. They said they couldn't comply with the state's new law, which treats their drivers as employees rather than contractors, eligible for benefits like minimum wage, overtime, sick pay and unemployment insurance.
It is unlikely that the court that set the case on October 13th will make a final decision before an election on November 3rd puts the decision in the hands of California voters.
"It is unfortunate that companies continue to disobey the law," said Mekela Edwards, an Oakland Uber driver who said he was fighting against the election measure.
Uber and Lyft drivers, some in support of the election and some against, held a loud rally outside Los Angeles International Airport Thursday ahead of the appeals court's decision.
"If people want to be employed, they can find another job," said Ramon, a driver who supported the measure known as Proposition 22 and refused to give his full name.
Lyft, Uber, DoorDash, Instacart and Postmates are spending more than $ 110 million to support the campaign. It would enshrine the current contractor status of drivers, albeit with some additional benefits, and override the state's gig worker law.
Lyft Inc (NASDAQ 🙂 shares rose 5.7% and Uber Technologies (NYSE 🙂 Inc shares 6.7% after the ruling.
The threat to cease service in the most populous US state was an unprecedented escalation in a longstanding battle between regulators, working groups, and gig economy companies that have turned traditional employment models around the world on their heads.
Uber and Lyft both welcomed the court's emergency stay order in separate statements and said they were pleased to continue their operations in California.
A Refield & Wilton poll of Californians on August 9th found that 41% of voters wanted to support the company's proposal and 26% were against, the rest are undecided.
Despite making amends on Thursday, California Attorney General Xavier Becerra's office said it remained confident and would continue its fight to defend workers' rights.
"California is America's economic engine because innovation and labor rights go hand in hand. Any company that suggests otherwise will make the wrong choice," Becerra said.
The companies had sought intervention from the California First District Court of Appeals in San Francisco to block a restraining order issued by a judge last week. That decision forced companies to treat their drivers as employees starting Thursday after midnight.
Uber and Lyft say the vast majority of their drivers don't want to be employees. Around 80% work less than 20 hours a week. The companies claim that their flexible on-demand business model is inconsistent with traditional labor law and advocate a so-called "third path" between employment and contractor status.
Under the "third way" proposal set out in the electoral measure, drivers would receive a health grant, minimum wage, reimbursements and health and disability insurance for workplace injuries.
Working groups reject company claims that current labor laws are inconsistent with flexible work schedules, arguing that companies should follow the same rules as other companies. They say the company elections would create a new lower class of workers with fewer rights and protections.
The regulatory and legal battle comes at a time when demand for travel has plummeted amid the coronavirus pandemic, with California among the slowest-recovering states in the US, according to the companies. Uber's revenue-generating grocery store, Eats, will not be affected by the shutdown, the company said.
California accounts for 9% of Uber's global trips and Eats gross bookings, but a negligible amount of adjusted revenue, Uber said in November. Lyft, which operates only in the US and has no grocery store, said last week that California accounts for around 16% of all trips.